Volatility increased this morning on EU stocks after most shares opened higher before registering steep declines in the first minutes of today’s trading session. This lack of direction underlines the state of uncertainty investors find themselves in as they digest the mixed economic developments from around the world. Investors aren’t very reassured by the slower death toll trend of the coronavirus in mainland China as new victims in other countries like Japan and South Korea spark fresh worries about the spread of the virus.
Photo by Kamil Kot.
In addition, the economic impact continues to grow in China after Beijing registered a significant 50% to 60% drop in smartphones sales during the 2020 spring festival. After airlines yesterday, it is now the turn of tech giants like Huawei, who accounts for 1/3rd of the 60m unsold smartphones, to get hit by the crisis. Investors are becoming more and more cautious about risky assets like stocks as the Chinese economic outlook is degrading at a significant pace with more and more traders and analysts expecting poor data from Beijing in the coming weeks and months.
Most European benchmarks remain steady as declines in consumer staples and communication services offset gains in the industrial sector. Telefonica is the worst performer in the Stoxx-50 Index so far after restructuring costs and Mexican operations hit its earnings. The company’s share price now trades below €6.30 and is challenging its 76.4% Fibonacci retracement level at €6.123.
